How can we pay high wages and not charge more?

Question

Unskilled labor is usually done for low wages--- working in meatpacking plants, restaurant kitchens, dry cleaners, unskilled construction workers (not specialized skills like carpentry or drywall though), etc.

Many people are upset that immigrants, either legal or illegal, have "taken their jobs" and that immigrants are "keeping the wages down" because they will do these jobs for $6 an hour. People are saying that meatpacking plants, etc, should raise their wages so they can attract American workers and do away with immigrants.

So how does a company deal with basically doubling their payroll overnight? Do you think that the American consumer is willing to pay $2 more per pound for chicken? Or 30% more on their restaurant check?

Do you think this will hurt small business more, because their profit margins are lower than big companies' to begin with?

Would families still go shopping and dine out if the prices went way up?

Can you raise pay without raising prices?

Let's look just at small businesses for this. A mom-and-pop type restaurant runs a food cost of 20-30% and a labor cost of 30-40%, plus there is other overhead like rent, insurance, etc. Line cooks make $8-10/hour and are predominantly legal immigrants. American workers want at least $15/hour for the same job. Paying that pushes labor up by 50-100%. Where's the profit left for Mom and Pop?

And my mom-and-pop restaurant example comes from 15 years experience in restaurant work as a manager and a chef for independant restaurants. The profit margin is a lot smaller than you might realize and the food cost is higher because few independants can get the big quantity discounts that big chains can.

One other thing--- immigrants in general, including the LEGAL ones, work for wages that are barely above minimum wage. This question is not about illegal immigrants in particular. It's very common to find a recent immigrant working as a dishwasher or gardener or office cleaner for $6/hour, and I can tell you, you do not find too many American-born folks who will take that kind of money to do these jobs!

Answer 1

People that think that raising pay will not raise prices are wrong. I do business in the food industry. Small vendors and suppliers have seen the damage this has done. In turn so have I. The funny thing is that some of these are still jobs that not just anybody will take, even with a higher salary. So, in answer to your question, NO you cannot raise pay and not raise prices.

BTW, seal whatever, you should use a thesaurus. Immature was the wrong word to use in your answer. "Are you so immature......" So not intelligent.

Answer 2

If I understood it correctly....in the past there was a ceiling on how much profit a company could make without a big tax. So there was an incentive to lower prices or increase the payroll, offer bonuses or other perks to the worker or better services to the customer. I don't know what changed as to whether these costs weren't deductable from the profit any longer or if there was no ceiling on the amount of profits they could make but whatever it was, changed things drastically all the way around. Everything from quality, customer service, wages, raises,bonuses, incentives and prices of goods changed. Profit wasn't good enough....it had to increase every year to please the stock-market. Each year it goes up and they are expected to do it for less....either cut payroll or raise prices or both.

I've been through many minimum wage increases. I have never seen 1 in which prices didn't increase, benefits decrease, vacation times shortned or not paid, less sick days or sick days allowed but without pay, lay offs, positions gotten rid of completely, and full time positions go to part-time. It wasn't that long ago in many jobs, they no longer have overtime for working more than 40 hrs. a week. Many people burned through these low wage jobs because the periods of overtime balanced things out.

With the influx of illegals and lower wages all it did was increase the profit margin to have to beat next year and therefore in order to keep the stockholders happy...prices will go up.

And yes....it hurts the small business owner because they aren't merged with other businesses to balance out a rise and fall in profits. They don't get the discounts a chain might get from massive purchases. They have to compete with either quality or service and there's only so much you can cut when the ceiling keeps rising. People won't go out to eat as much. If they do the first thing that goes is the tips. But many don't realize these jobs depend on the tips. The waitress is taxed 20% of your bill as a tip whether you actually tip her that much or not. So until they cap the profits and make things trickle down again......we won't be able to afford it. Alot won't matter though.....coz we're a global market now. What we don't buy...maybe China or someplace else will or they'll close shop and we won't have that option anymore. And that's not going to be fair till there's a universal minimum wage and fair trade practices.

Answer 3

Let ALL immigrants file the proper documents and enter the country LEGALLY. This will give them earnings protections which are mandated by federal law. If they insist on coming in under the radar and working illegaly to avoid paying taxes for the freebies that our generuos government makes available despite their criminally breeching our borders.

Now as for raising pay without altering prices...in the widest of possible theories, yes. But it is unlikely that any business trying to turn a profit would be that stupid. The only way would be to eliminate enough workers to make their wages available.

Years ago I managed a deli and found a similar problem. I was alolowed to spend only a given amount on labor out of the weekly budget. Now, to maintain a wage hike I would have to massively increase sales by selling more product or raising prices. I was prohibited by store policy to raise prices, and the shoppers were pretty much set in their shoping practices. But the workers wanted more money. There was one solution. I had to fire the weakest link, and divide their hours among the others.

People go into business to provide a living for their families and their own retirement. Taking a cut in profit may be the warm and fuzzy thing to do, but it takes away from the owners family.

Each time we hear about auto workers re-negotiating a contract... its for money. With wages and a slew of benefits combined the average auto-worker makes $65+ an hour and climbing. Thats why cars are so expensive. In order to pay the higher wages, and still afford research and development, building, purchasing parts, benefits, dividends to stock holders (a sort of twisted loan), taxes, advertising, and any number of fees and other expenses...the price of the car has to go up.

If you want to experience this Utopian ideal move to Europe for a while. You'll love it. $6 for a gallon of gas. Thats normal, not a crunch price.

Or try this.. set up a Monopoly game with a few 'house rules. Everybody pays and charges the same except for you. You will take 30% less in rent (because you have cut profits to pay your staff more), and pay an additional 30% to other players( for the higher price that you are willing to pay for goods and services) as well as +30% when buying property and houses. I got the 30% from your example about the restaurant.

Unless Lady Luck smile a big toothy grin in your direction, I think we can predict the outcome.

You might have heard about older folks on fixed incomes sometimes having to eat food not meant for humans in order to keep their homes or their prescriptions coming. How long could they hold out with your increased food prices?
If you are out in the world and have to keep a budgettryit on paper with 30% less money. Good luck

Answer 4

Even unskilled labor makes more than minimum wage. The reason for upping minimum wage has nothing to do with the people who might make it, and that number is low. The reason to increase minimum wage is that Labor Unions are tied to the Minimum Wage. IF minimum wage goes up so does the hourly wage of a union worker. That means cars will go up in price, refrigerators, washer, dryers, clothing, all hard and soft goods made by union workers will increase. Inflation will follow, maybe not high inflation but enough that we all lose ground.
Corporations do not pay taxes or wages, They pass the cost of business, taxes and wages, on to the consumer. For all you people out there cheering when a senator says they are going increase taxes on business or raise the the min. wage, remember, it will come out of the pockets of the consumer

Answer 5

The reason these jobs say they can not afford to pay workers what they really deserve is because the owner/CEO's/Managers are taking the money and putting it in their own pocket!

When someone hires illegals the only thing they are trying to do is put more money in their own pocket! Bar NONE! That is the only winner, the illegals who got the job lose, Americans lose, and so do the consumers.

Does anybody think for a minute that if you told all the illegals working in America they are now legal and can get any job they want, would continue to do those crap jobs for crap pay?

Hell no they would'nt!! Then guess what that business would be looking to hire illegals again to fill the jobs so he could pay them crap pay and keep the money in his pocket!

STOP BUSINESS'S FROM HIRING ILLEGALS, FINE THEM PUT THEM IN JAIL AND CLOSE THEIR BUSINESS DOWN! They are the only people who profit.

Answer 6

raise pay. raise prices. The raised pay will pay for the prices.

I've looked into this and prices would not raise much, nor have prices dropped to account for the 30% drop in meat packing job salaries nor the 40% drop in farm worker salaries that has occured due to the huge influx of illegal workers.

Distribution is the biggest cost of bringing goods to market in the case of produce, for example. Studies have shown that raising farm worker wages 40%, out of the poverty level and back to what Cesar Chavez had won for workers, would cost a family of 4 $10 more PER YEAR. Labor just isn't much of the cost of the product.

I'd gladly pay that.

As it is we are paying for it sideways through welfare and education dollars, and worse, through ruining opportunity through education for our own children as ESL students become the primary recipiants of OUR education funds.
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edit - did you say the cooks were predominantly LEGAL immigrants? There is nothing wrong with hiring LEGAL immigrants, so long as laws aren't changed to ignore burdens on our schools and services and to let legals flood the market. It is those here illegally driving wages down below where legals and citizens would otherwise get paid that we are against. And it is more for me based on schools and problems there than on the wages themselves. However, the jobs are magnets and cheap wages covers a hidden cost to our schools and services when you talk about importing below poverty level workers.

Answer 7

Your numbers are a little off. They would not have to double the payroll and we wouldn't have to pay 30% more for a restaurant check. Prices would go up but it would be manageable, especially if wages go up too.

Answer 8

How do you come up with "doubling of payroll"...with a possible 2.00 increase in minimum wage?

Sounds like your tacking on more than enough to cover any wage increase.....according to your theory that would be a windfall for you!

Geez....talk about "fuzzy math"!

Oh btw-"meatpacking" as unskilled labor!...LOL
Think again...if that were the case they would be losing lots of fingers and limbs! Can you slice and cut a 100 lb side of friggin beef with a saw?

Answer 9

Easy, take the money out of big business profits. Eliminate 90 % of the government.

Answer 10

Who did the work years ago ? If you make it a fair price people will pay . If you don't pay a fair wage , who will have the money to buy anything anyway